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KPMG’s Week in Tax: 11 - 15 June 2018

KPMG’s Week in Tax: 11 - 15 June 2018

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Transfer Pricing

Australia: The Australian Taxation Office released the 2018 “International Dealings Schedule” stationery and instructions that focus on identifying transfer pricing risks and in particular research and development arrangements, offshore hubs, hybrid arrangements, and concessions for foreign exchange disclosures.

India: A tribunal held that the taxpayer was not required to undertake any “brand building” for a foreign related party (absent an agreement), and that there was no tangible evidence to substantiate that advertising, marketing, and promotion expenses incurred by the taxpayer led to brand building or to the creation of marketing intangible that benefited the taxpayer group and that warranted a transfer pricing assessment.

Asia Pacific

Japan: The National Diet passed a bill for ratification of a “comprehensive progressive agreement” for the Trans-Pacific Partnership trade agreement.

Australia: The 2018-2019 Queensland budget extends a 50% payroll tax rebate for wages paid to apprentices and trainees until 30 June 2019.

Thailand: Draft amendments released by the Thai Revenue Department would introduce alternative currency conversion methods and a new functional currency approach.

China: An announcement by the State Administration of Taxation simplifies procedures for claiming corporate income tax benefits by applying self-assessment procedures, starting from the annual filing for the 2017 tax year.

Europe

Switzerland: The corporate tax reform legislation continues to be considered and amended. The legislation is expected to be approved by the parliament in the autumn 2018.

Netherlands: Advance tax rulings will no longer be provided for a “standard” securitization transaction intended to finance the originator (for example an RMBS transaction).

Denmark: The Court of Justice of the European Union (CJEU) concluded that the Danish rules that apply with respect to the deductibility of losses from foreign permanent establishments were contrary to the EU law on freedom of establishment and clarified the applicability of the Marks & Spencer exception.

EU: The European Commission released a report showing that tax revenues rose in 19 EU Member States in 2016 as a percentage of GDP in 2016.

Czech Republic: Legislation to amend the value added tax (VAT) law—including proposals relating to lease-related services and repairs of real estate exceeding a threshold amount—completed the comment period prior to being submitted to the Chamber of Deputies.

Czech Republic: The 2019 tax package, to be submitted by the government, includes a new proposal that would require taxpayers to report income transferred abroad and that would clarify the “abuse of right concept.”

Czech Republic: Proposed changes to the income tax law completed the comment process and include provisions that would implement the EU Anti-Tax Avoidance Directive (ATAD) into Czech tax law.

Bulgaria: A “quick glance” overview of taxes in Bulgaria—a tax card—was released by the KPMG member firm.

Germany: The CJEU Advocate General issued an opinion concerning German rules and their interaction with the “Standstill Clause” and whether a restriction on the free movement of capital may be justified by the need to guarantee the balanced allocation of powers to tax and the effectiveness of fiscal supervision.

UK: All VAT-registered businesses with a turnover in excess of £85,000 will be required to maintain digital records, effective from 1 April 2019.

United States

A supplement to KPMG’s book, describing the measures in the new tax law, summarizes federal administrative guidance and recently enacted legislation with respect to provisions of the new law. Excerpts from select articles and other reports that KPMG professionals have prepared with regard to provisions of the new law are included. Read the KPMG supplement [PDF 559 KB]

Notice 2018-57 announced that the U.S. Treasury Department and IRS intend to amend the regulations under section 987 to defer for one additional year the effective date.

Proposed regulations concern arbitrage investment restrictions under section 148 that apply to tax-exempt bonds and other tax-advantaged bonds issued by state and local governments.

The Puerto Rico Treasury Department issued guidance on claiming the “employee retention credit”—a credit available to employers that continued to pay salaries to employees during a period of “inoperability” following Hurricane Irma or Hurricane Maria.

The Michigan Department of Treasury issued preliminary guidance on the state corporate income tax treatment of certain new federal tax law measures—specifically, the “mandatory repatriation” under IRC section 965 income and concerning “global intangible low-taxed income.”

The Pennsylvania Department of Revenue issued a letter ruling that concludes that two taxpayers did not meet the definition of a “referrer” and therefore were not subject to use tax notice and reporting requirements. If a business qualifies as a “referrer,” it must make an election either to collect sales tax or to comply with use tax notice and reporting requirements.

Several states—including Illinois, Louisiana, Hawaii, and Connecticut—are in the process of either implementing or finalizing the adoption of economic nexus standards for sales and use tax purposes.

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KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.
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For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.